Casual calamity

The Full Bench of the Fair Work Commission (Commission) has decided to insert a model casual conversion clause into the majority of those modern awards which did not already have this type of clause, including awards in the retail, restaurant, banking, aged care, mining, maritime and transport industries.

This change comes in response to numerous union and employer groups applications as part of the Commission’s four yearly review of modern awards.

The Commission considered that this change was necessary to ensure that the overall objective of modern awards is met and that it would not affect the cost to employers in any discernible way.

The proposed model clause will give casual employees covered by those awards the right to request to convert to part-time or full-time employment if:

• they have worked with their employer on a casual basis for 12 calendar months or more; and
• during that time they have worked a pattern of hours on an ongoing basis which without significant adjustment could continue to be performed in accordance with the full-time or part-time employment provisions of the relevant award (a “regular casual employee”).

Employers must provide all casual employees (whether a “regular casual employee” or not) with a copy of the model casual conversion clause within 12 months of commencing employment.

A casual employee who meets the above criteria can request to convert their employment to full-time or part-time, based on whether they have worked on average 38 hours per week or less.

Where an employer agrees that an employee should be converted from being a casual employee to a part-time or full-time employee, then this must be recorded in writing and confirmed to the employee.

Employers can refuse a casual employees request to convert to part-time or full-time employment on reasonable business grounds, including if:

• it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment;and
• it is known or reasonably foreseeable that:
  • the casual employee’s position will cease to exist within the next 12 months;
    the hours of work which the employee is required to perform will significantly change or be reduced within the next 12 months; or
  • there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months which cannot be accommodated within the days and/or hours during which the employee is available to work.

Employers must consult with employees before refusing such a request and must provide reasons for any refusal in writing within 21 days of the request being made. An employee can challenge the employer’s refusal through the dispute resolution clause of the applicable award.

Employers cannot engage or re-engage an employee, or vary or reduce their hours, so as to avoid any rights or obligations under this model conversion clause.

The proposed clause has not yet been inserted into the modern awards, however employers with casual employees covered by these awards should be aware of these upcoming changes and will need to put in place a system to:

• monitor the periods of engagement for those employees;
• ensure that those employees are provided with a copy of the conversion clause in the first 12 months of their engagement;
• receive and consider any request for conversion received from an employee; and
• consult with that employee about that request and respond in writing to the employee either agreeing or not agreeing to that request.

It remains to be seen the extent to which casual employees will seek to avail themselves of the conversion provisions and to what extent a large scale move to convert will impact employer’s labour models where there is substantial reliance on casuals.

Overtime entitlements for casual employees

As part of the modern award review, earlier this year a Full Bench of the Commission also decided to vary the General Retail Industry Award 2010, Fast Food Industry Award 2010 and Hair and Beauty Award 2010 (together, the Awards) to provide casual employees with an entitlement to overtime penalty rates.

The decision came after submissions were received from unions and employer bodies, with the Commission ultimately agreeing it was ‘inexplicable’ that casual employees did not have the benefit of overtime penalty rates afforded to full-time and part-time employees.

The Commission rejected submissions that making such an amendment to the Awards would result in a significant costs burden for employers, on the basis that most casuals in the industries covered by the Awards do not work the equivalent of full time hours.

As a result, casual employees covered by the Awards will be entitled to overtime penalty rates when:

• they work in excess of 38 ordinary hours per week; or
• they work more than 38 hours per week averaged over the course of an applicable roster cycle; and
• for casual employees covered by the Retail Award, the hours worked on a given day exceed the span of ordinary hours specified in the Retail Award or exceed 11 hours on one day of the week and 9 hours on any other day of the week;
• for casual employees covered by the Fast Food Award, the hours worked during a day exceed 11 hours; or
• for employees covered by the Hair and Beauty Award, the hours worked during a day exceed 10.5 hours a day.

These amendments will come into effect from 1 January 2018.
As a result of these amendments, employers with casual employees covered by the Awards will need to put in place a system to:

• properly record all hours worked (and when) by those casual employees; and
• change payroll arrangements to ensure that overtime payments are properly calculated and paid to those employees.

Employers who heavily rely upon casual employees working substantial hours per week will need to do a cost benefit analysis and if required adjust their labour arrangements to ensure there is not a labour cost blow out.

Gadens’ Employment Advisory Team can assist employers with more detailed advice on modern award compliance issues and ensuring compliance with these casual employment changes.